WONG SIU FAN v. MAY'S ENGINEERING CO LTD

DCEC1069/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES' COMPENSATION CASE NO. 1069 OF 2000

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JUDGMENT

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Introduction

1. This is an application for employees' compensation by the Applicant ("AP") on behalf of herself and the dependants of Ng Yan Kwong, deceased ("D") under the Employees' Compensation Ordinance Cap.282 in respect of D's fatal injury on 18th May 1999 when in the course of employment with the Respondent ("R") as a technician he was assigned to work at Unit A, 13th Floor, Unison Industrial Centre, 27-31 Au Pui Wan Street, Fotan, New Territories ("Premises") and was electrocuted ("Accident").

2. R claimed that in or about February/March 1999 Solitech (HK) Limited ("Solitech") sub-contracted renovation works at the Premises ("Renovation Works") to May's Engineering Company ("Firm"), which in turn sub-contracted the entire contract to R. R sub-contracted the electrical installation works thereunder ("Electrical Works") to Wah Cheong Engineering Company ("WC") or D, registered electrical worker and specialist sub-contractor. Subsequent to the completion of the Renovation Works, a "sand paper machine" ("Machine") was delivered to the Premises. The issue is whether Solitech engaged R which in turn employed D to carry out the power connection works for the Machine ("New Electrical Works") on 18th May 1999 or whether Solitech directly engaged D for such works. R denied D was its employee.

3. The parties agreed to the following :

(a) AP and the other persons named in paragraph 3(6) of the Application were D's dependants at the time of the Accident/his death;

(b) if liability is established, the quantum of the compensation is HK$1,512,000.00;

(c) if liability is established, interest would be payable by R to AP on the compensation awarded at half judgment rate (ie 4% pa) from the date of the Accident to the date of judgment and thereafter at judgment rate until payment.

4. It was further agreed that if D is found to be R's employee in carrying out the New Electrical Works, there would be no dispute as to how the Accident occurred or that the Accident arose out of and in the course of employment. AP, Mr Wu Cheuk Kwan ("Wu") and Mr Hon Kwok Chung ("Hon") gave evidence on behalf of AP, and Mr Shing Kwai Tai ("Shing") and Mr Leung Kin Hung ("Leung" or "Master Leung") gave evidence for R.

AP's case

5. Wu and Hon, like D, were registered electrical workers. Wu had known D for 22-23 years and had previously worked with D. Hon knew D for 10 odd years through D's elder brother but had not worked with D prior to the Electrical Works. Wu said the nature of their work was similar.

6. Wu explained that an electrical worker got work (a) when asked by friends to work as daily paid employee (or打日散according to Hon) or (b) when he "sub-contracted" electrical works at a labour and material inclusive agreed price to be paid upon negotiation with the main contractor by stage payments for the purchase of materials or payment to his own workers (or判做 according to Hon). Wu would describe an electrical worker under (b) as a "semi-employee" where such worker did not have business registration and requisite licence to apply for approval of the electrical works and electricity supply ("Application") and had to arrange for a licensed contractor to lend its name to formally take up the job and then sub-contract it to the electrical worker, who would not be paid daily wages but the balance of the price after the licensed contractor took a cut. Under cross-examination, Wu accepted that such arrangement was in fact a sub-contract.

7. Apart from the fact that D sub-contracted the Electrical Works (being part of the Renovation Works, which included piping and other works) and that Wu and Hon were D's daily paid employees, Wu and Hon did not know D's arrangements in respect of the Electrical Works. They took instructions from D and looked towards D for payment of outstanding wages. Hon said D determined the materials used and the number of workers.

8. Although Wu said in his witness statement that "I understand that [R] sometimes would sub-contract certain project of the electrical works to [D]. Quotations would be issued by [D] in the name of [WC] to [R]. In fact there is no such company registered under the name of [D]", Wu insisted he had never heard of WC until AP's solicitors mentioned it to him and he had never seen D's quotations. He only saw WC's quotation dated 4th March 1999 which stated "試機日薪計算(800元)工" at the offices of AP's solicitors, but he did not know whether this was a preliminary or final quotation.

9. Hon's witness statement referred to the names of Solitech and R, but he maintained that he did not know such names until informed by AP's solicitors or that D "sub-contracted" the Electrical Works from R.

10. Hon knew certain machines would be delivered from the United States to the Premises and close to the end of the works, American technicians were at the Premises installing machines. The Electrical Works were essentially completed by mid-April 1999 upon making the Application. Wu said the Inspection probably took place on 20th April 1999 as stated on the completion certificate but he was not sure.

11. A few days before the Inspection (ie on or about 15th or 16th April 1999), Master Leung asked D, Wu and Hon to have lunch ("Lunch"). Hon said that at the Lunch D introduced him by his nickname "Shark Chung" (鯊魚忠) to Master Leung. Master Leung asked how the Electrical Works were progressing. D said the Inspection would take place in 2 days' time. According to Wu, D asked Master Leung how to charge the work fees (工數) for the New Electrical Works and Master Leung said D could charge HK$800.00/day as replacement work (代工), which Wu understood to mean in their trade as some future work with a break in continuity from the completed works of a project carried out on an employed basis at a daily salary. But according to Hon, Master Leung said D would be asked to assist with the New Electrical Works at a daily rate (篤工數) which Hon understood to mean 打日散. Hon in his evidence said there was no mention of the daily rate. Hon denied any mention that D should directly liaise with Solitech.

12. Wu had known Master Leung (and Shing at about the same time) for more than 10 years upon D's introduction. He knew Master Leung did all types of renovation works and was the boss of 美思 in 1999. He only saw Shing briefly once or twice in over 20 days when he worked at the Premises, and Shing never had lunch with them. Hon did not know Master Leung prior to the Electrical Works and even at the trial, he did not know Master Leung's full name. He had never seen Master Leung attending the Premises to check on the works and had not seen him since the Lunch. Hon did not know Shing who was not present at the Lunch. He also had not heard of WC and did not know whether D had any business registration.

13. 2-3 days after the Lunch, D paid Hon's wages and he left. Wu ceased working at the Premises 2 days after the Application. It was the tail end of the works and there was no need for so many workers. Thereafter D asked Wu to work at Yuen Long and Sai Kung on other jobs. D paid Wu a daily salary for these subsequent jobs.

14. AP (D's widow) recalled that on 17th May 1999 D called her to say that he had just returned from a visit to a Fotan factory with Master Leung to inspect a machine which he would work on the following day. She did not know the arrangements between D and Master Leung. AP had never heard of WC and denied that D had a company by the name of WC or that he had sub-contracted electrical works in the name of WC. AP found some yellowed A4-sized letterhead in the name of WC and 羅定 (Looing) amongst D's personal effects and said D might have used them to prepare quotations.

R's case

15. R was incorporated in 1995 and Leung and Shing were its directors/shareholders. In March/April 1999, Solitech contracted out the Renovation Works to the Firm, which in turn sub-contracted such works to R. Shing said he had more responsibilities than Master Leung in respect of the Renovation Works. Leung said Shing liaised with Solitech and D on contract and miscellaneous issues and on the scope of the Renovation Works. Leung supervised the works which included plastering and painting works apart from the Electrical Works. He was responsible for 彈線 (ie measuring lines for the walls) and deciding whether to increase the number of workers to meet the deadline. Leung was experienced in technical aspects of the Renovation Works but not the electrical works which required specialist expertise and an electrical licence. During the Renovation Works, Leung and Shing were at the Premises a lot of the time to supervise and inspect progress.

16. Leung knew D for over 10 years. R had previously worked with D/WC (but not frequently) prior to 1997. They last worked together in March 1997 in respect of electrical works at 大埔新嘉利廠房、寫字樓. Leung recalled they also worked together at jobs in Wanchai and New Territories prior to 1997. R had never employed D but engaged D as its sub-contractor. Leung did not know whether D had permanent employees or his own shop but he often changed workers. Leung contacted D by his mobile telephone and not WC's telephone number (which Shing agreed was an old one).

17. Without any electrical licence, R had to sub-contract the Electrical Works to others. R asked D/WC to submit quotation, which he did. D designed the electrical circuitry. The finalised quotation reflected the actual works done by D/WC. D explained to Shing that the letterhead of a page of the finalised quotation was in the name of "Hong Kong of Looing Wah Kiu Club., Co. Ltd." because he had used up WC's letterhead which was in the course of being printed. In 1997 D also used WC's letterhead in giving quotation to R.

18. Shing said he asked D to give the quotation of "試機日薪計算(800元)工" in the preliminary quotation because Solitech requested for an electrical worker to connect power supply for the machines which might be delivered after the completion of the Renovation/Electrical Works. Shing therefore asked D to quote a daily fee (日工) to be paid by Solitech for such works.

19. Shing said he had estimated the cost of the Renovation Works (which he gave to the Firm) on the basis of a worker's daily salary of HK$800.00. The Electrical Works were sub-contracted to D on the basis that D/his workers would earn a daily salary of HK$700.00, so R would make a profit of HK$100.00 on each worker. At the beginning of the Renovation Works, Solitech also asked him the fees/wages of 日工 (day worker or general labourer) generally and he told Solitech a painter's daily wages were HK$700.00 and that of an electrical worker HK$800.00. But such daily wages referred to above were not true 代工 (replacement work). In the context of Renovation/Electrical Works, 代工(replacement work) referred to how small miscellaneous items of work that were difficult to price were charged and not the nature of the work. D and his workers had earned such代工 (replacement work) fees during the Renovation Works but R paid such代工 (replacement work) fees to D and not his workers directly. Had R engaged the workers directly, there would have been no need to pay D/WC.

20. During the Electrical Works, Leung and Shing often had lunch with D and his workers. Shing would probably recognise Hon and Wu but did not know their names. He recalled first meeting Wu over 10 years ago. When reminded by Mr Lam, he remembered Wu was called "Ah Kwan". Shing could not recall D's other worker at the Lunch and had no impression of "Shark Chung" or Hon. He accepted that they might have known each other when they were working but he could not recall Hon now. Leung recognised Wu (whom he first met when D brought him to do work at the Premises) but not Hon. Under cross-examination, Leung said he might have seen Wu previously (probably during previous decoration job) but he could not remember. Leung had no impression of Hon working at the Premises and would not be able to recognise Hon even if he had seen Hon before. Hon was not introduced to him by nickname or otherwise. He said there was no need and D did not introduce his workers to Leung. When they had lunch together Leung talked mainly with D. Had it been any other sub-contractor, such reticence by D would have been due to fear that his workers might cut him out and deal directly with R. But Leung trusted D and would only sub-contract works to D. Shing and Leung had no personal grudge with Wu, Hon and D.

21. In relation to the Electrical Works, Leung told D the completion deadline and D made appropriate arrangements to buy materials and carry out the works. R only liaised with D who would instruct his workers by telephone even if he were away from the Premises. The switches (電掣) were charged by the number installed and the cables by their installed length. The Electrical Works were completed by end of April 1999 after the Inspection whereupon D and his workers left the Premises. D asked the proprietor of Yau Man Electric Eng Co ("Yau Man"), who was D's friend, to lend Yau Man's name for the Application. By the end of April 1999, the Renovation Works were also completed and the Premises were handed over to Solitech for production.

22. Shing said it was orally agreed with Solitech that as part of the Renovation/Electrical Works, R would only handle power connection for testing machines delivered prior to the completion of the Electrical Works (see, say, items B.5 and B.8 of D/WC's finalised quotation for power connection to MCCB up to but not including connection to the production machines). Therefore the provision "試機日薪計算(800元)工" in the preliminary quotation was not repeated in the finalised quotation.

23. Shing explained that the notation in D/WC's finalised quotation of "99.4.8日代工搬機" meant that due to insufficient delivery workers, he asked D and his workers to assist as delivery workers to move machines for which D charged as replacement work. It had nothing to do with the Electrical Works.

24. D had been fully paid for the Electrical Works, including the refund of retention monies on 13th May 1999. R's cheque payments were to D because D told Shing the payments were for workers' wages and purchase of materials and he would issue receipt(s) in WC's name. R insisted that D sign temporary receipts which referred to "Fotan Electrical Works (Wah Cheong)". In R's 1997 dealings with D/WC, the formal receipts were on WC's letterhead with WC's company chop.

25. By mid-April 1999 Solitech confirmed that some machines would arrive after completion of the Renovation Works. Solitech was worried there would be no one to carry out the New Electrical Works after R vacated the Premises and asked Shing to find an electrical worker for such works and to carry out future maintenance. Shing regarded D as the most readily available registered electrical worker who knew all about the electrical installations at the Premises, so he recommended D to Solitech. Later, he gave D's telephone number to Solitech for their direct negotiations.

26. R did not have any licence for or expertise in electrical works and it would have been more expensive for R to take up the job with a profit margin than it was for Solitech to directly engage D. Solitech could easily have found another electrical worker. In any event, R's profit could not have been more than a small management fee, which would end up as a loss for R as it would have to incur time and travelling expenses to supervise the works. There was no point for R to be involved in small jobs or maintenance work, so Shing informed Solitech of their stance from the outset.

27. Shing then discussed the New Electrical Works with D about 3-4 times. In mid-April 1999 (about 15th or 16th April 1999), Leung, Shing, D and 1 or 2 of D's workers attended the Lunch. During the Lunch, Shing asked D whether he wanted to sub-contract (判做) the New Electrical Works or, if he did not know how to price such works, treat the works as replacement work (代工). D said he would think about it. There were no firm directions or recommendations on how to charge Solitech. Leung only added a few words. In fact, had Leung not been informed by Shing, he would not have known that there were machines were to be installed. Solitech would liaise with D on the charges and Leung thought D might have given a quotation to Solitech.

28. After the Lunch, there were further discussions. Shing said he had discussions with D by telephone or at face-to-face meeting(s) at the Premises about how D should pitch the price to Solitech. Leung said there were a further lunch and 2 oral discussions, during which Shing did most of the talking. Shing told D if he could work out the price, he could ask for a lump sum price but given that the engineers might be there for several days, he might have to quote a larger sum. If D could not assess the price, he could ask for payment at a daily rate irrespective of whether work was done for a whole day or not. It was up to D to determine the material costs but he asked D (and D agreed) to at least ask for HK$800.00/day for labour costs because R charged Solitech on such basis. Leung also confirmed although he knew an electrical worker of D's experience could charge HK$700.00-HK$800.00/day, they did not recommend a particular price to D because D as electrical worker should know the cost.

29. Subsequently, Solitech called Shing to find D, so Shing urged D to quickly conclude the arrangement with Solitech. Solitech approached Shing because he had promised to find an electrical worker for Solitech. On the other hand, D did not know the particulars of the production machines nor how to pitch the price. D wanted some more information to hand before direct liaison with Solitech. Thus, Shing asked Solitech for particulars of the Machine and other machines and he told D the same. If D pitched a wrong price, he might have made a loss.

30. Shing and Leung accepted that their witness statements made no mention of the discussions after the Lunch. Shing denied that the tenor of his witness statement was to make the reader believe there was only one discussion with D in respect of the New Electrical Works. Shing and Leung said that when they made the witness statements, they had not been asked about the further discussions.

31. By the time D went to the Premises on the date of the Accident to carry out the New Electrical Works, he would already have agreed the price with Solitech. R did not take up the New Electrical Works and was not involved in negotiating the arrangement for such works between Solitech and D. Shing did not know how much D charged Solitech for the works on the date of the Accident. R was not paid for such works nor did R pay D for the same.

32. Shing denied that he had ever discussed with D about 篤工數, 打日散 or 代工for the New Electrical Works. Conceptually, if R employed an electrical worker, he would be 日工 (day work) or 打日散, which was different from 篤工數. For 打日散, payment was for actual work done by the worker for the day. For 篤工數, payment was for making workers available on standby for work which might or might not materialise pursuant to the employer's (業主) request, so R could charge the employer even if no actual work was done. However, R would not specifically engage workers to have them on standby because R or its sub-contractor would have workers at a work site. Should the work materialise, R would simply assign such workers to carry out the employer's (業主) designated task. If the worker (R's employee) was merely on standby without actually carrying out work, he would not be paid but R could make a profit by 篤工數. If the worker actually carried out work, R would pay him a day's wages (日薪). If the worker was employed by R's sub-contractor, the sub-contractor would pay the worker's wages for that day and claim payment from R who would in turn claim payment from the employer (業主).

The law

33. The starting point is Cooke J's comments in Market Investigations Limited v Minister of Social Security [1969] 2 QB 173 as approved by the Privy Council in Lee Ting Sang v Chung Chi-keung [1990] 2 WLR 1173 :

"The fundamental test to be applied is this : ' Is the person who has engaged himself to perform these services performing them as a person in business on his own account?' If the answer to that question is 'yes', then the contract is a contract for services. If the answer is 'no' then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task."

34. The aforesaid principles were approved and adopted in Chan Kwok Kin v Mok Kwan Hing and anor [1990] 2 HKC 65 where the Court of Appeal held that whether the person was an employee or an independent contractor was a question of fact to be determined by the trial court. The fundamental test to be applied in distinguishing between a contract of service and a contract for service was : "Is the person who had engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes", then, the contract was a contract for service. If the answer is "no", then, the contract was a contract of service.

35. Chitty on Contracts 28th ed, Vol.2 at paras.39-009 - 39-027 at pp.793-804 set out some of the factors which should be considered in determining whether a person was engaged as an employee or an independent contractor.

Assessment of the evidence

36. I find Shing and Leung honest and reliable and their evidence straightforward and cogent. Whilst there might be minor differences in their evidence, I see that as a result of their different roles and the lapse of time. I find no material inconsistencies or contradictions that caused concern over their veracity. However, I do not have the same favourable view in respect of Wu and Hon. AP was unable to substantively assist on the issue of liability. Where there are material differences in the evidence between AP's and R's witnesses, I accept the evidence of the latter.

37. Mr Lam submitted that whatever the relationship between R and D in respect of the Electrical Works, it ended upon its completion and payment made, so it is unnecessary to make a specific finding. Although it is not a core issue in the present case, due to the close nexus between the Electrical and New Electrical Works, I regard a finding on the nature of the parties' relationship in respect of the Electrcial Works essential to a proper understanding of the factual matrix and background of the New Electrical Works.

38. I find on the balance of probabilities, after considering the totality of the evidence and counsel's submissions, that Solitech sub-contracted the Renovation Works to the Firm, which sub-contracted such works to R, which in turn sub-contracted the Electrical Works to D in WC's name as independent contractor and not as employee. I do not propose to set out all the reasons for such finding but the main reasons were :

(a) Wu and Hon accept that an electrical worker can in their trade at times be a sub-contractor rather than an employee. It is clear that Wu and Hon's evidence that they essentially accepted that D sub-contracted the Electrical Works from R. D engaged his own workers, paid them, decided when to terminate their engagement, planned/purchased materials, gave quotations under a company name, carried out the works, liaised with R, and negotiated with R on the price of the works (which was inclusive of labour and materials) and on interim payments. In short, D accepted the Electrical Works as a business and bore the risk of profit and loss. I am not persuaded by Wu's label of "semi-employee". The nominal interposition of a licensed contractor, such as Yau Man, for making the Application and the fact that it would take a percentage cut from the price for its role before sub-contracting the entire job to the electrical worker who got the job in the first place, such as D, cannot render such electrical worker to become an employee of the head contractor.

(b) R did not have any electrical licence. D, a registered electrical worker, was responsible for making the Application and for arranging Yau Man to endorse the Application, which is consistent with Wu's description of "sub-contracted" electrical works. D designed the circuitry and carried out the electrical installations. Other than telling D the completion deadline, Shing/Leung left the carrying out of such works to D. In my view, D undertook overall responsibility of the Electrical Works up to the stage of certification by the power company for electrical supply.

(c) It is also telling that, according to Leung, the Electrical Works were charged on the basis of the number of switches (電掣) and the measured length of the cables installed and not by reference to labour spent. Further, R kept the retention monies against D which was only released on 13th May 1999 when the works were completed and confirmed to be in order.

(d) Wu and Hon regarded themselves as D's employees in carrying out the Electrical Works and received their daily wages from D. Mr Lam submitted D and his co-workers might all be R's employees and it was simply convenient for D to act as a "co-ordinator" with R (Chan Kwok Kin's case (supra)).

Shing pointed out (and I accept) that had R employed D and his workers, there would have been no need for R to pay D/WC only. Further, neither Wu nor Hon suggested that D was a "co-ordinator". They only looked towards D for instructions and salary payment. Hon described D as his "boss". This is mirrored by Leung's evidence that he would only liaise with D who would give instructions to his workers even if he was away from the Premises or when something was urgent.

Also, from the above findings, D's role was much more than that of a "co-ordinator" or that of an employee carrying out tasks delegated by an employer. His role was that of an independent sub-contractor.

(e) Shing and Leung said that R dealt with D as WC all along as their sub-contractor. Documents reveal that D not only issued a quotation in WC's name in 1997 but also a receipt on WC's letterhead with WC's company chop. Nevertheless, Mr Lam submitted that R failed to discharge its burden in proving D operated a business in WC's name. There was no business registration of WC in D's name. AP explained that D used WC's yellowed letterhead to prepare quotation. The telephone number thereon could only have been used quite some time ago, so even if WC ever existed, it was history. Mr Lam argued that R knew that WC did not exist or at least WC did not maintain any bank account for the deposit of cheques and did not issue receipts for payments received for the Electrical Works.

R had no obligation to investigate WC; it was entitled to act on D's representations, particularly as R trusted D and had dealt with WC satisfactorily in the past. Shing did query D on the Looing letterhead and received an explanation. In my view, it is sufficient that D represented and held out to R that he operated under WC's name in the course of carrying out works as an independent contractor. This is evidenced by D's quotations to R under WC's letterhead in 1997 and 1999. I find it implausible that any employee who only offers his labour would tender a quotation on company letterhead for a job covering both labour and materials cost. In my view, D did do as a business (and he held himself out as carrying on that business in WC's name) rather than as employee.

(f) Mr Lam alternatively submitted that if I were not with him on his primary submissions above, WC was at most a one-man company and D might have asked other co-workers (ie his friends or at most daily casual workers) to help him finish the job. There is no evidence that WC operated as a business under a business registration, from business premises, had some kind of business organisation, and had paid profits tax. However, both Wu and Hon clearly said they were D's employees and looked to D and no other for instructions and salary payment. Neither of them ever gave evidence that they were merely extending a helping hand as friends in respect of the Electrical Works. I reject Mr Lam's suggestion.

Mr Lam went further to ask the court to apply local knowledge in the construction and renovation trade to find that in reality D was merely using WC's name for convenience to enable him to secure "a bigger job" that could last over a relatively long period of time, and that when he was unable to do so, D had no reason to refuse any other daily job offered by other companies, friends or co-workers and to work on a daily basis. I am not persuaded by such argument. There is no basis for the court to take judicial notice of the custom and trade practice of electrical works in Hong Kong, which clearly is a matter of fact and evidence. No such evidence was led from Hon, Wu, Shing or Leung despite their experience.

(g) Wu in his evidence shied away from any knowledge of WC despite his express reference to the same in his witness statement. I find that he did so in order to downplay any overt indications that D was acting as in independent contractor. Hon also shied away from knowledge of Solitech and R despite express reference to the same in his witness statement. I find it quite implausible as Hon worked at the Premises for 10 odd to 20 days and even on his own evidence, the factory's (ie Solitech's) supervisor and staff were present.

(h) Mr Lam asked the court to note that the cheques in payment of WC's quotations were payable to D and not WC. I accept on the balance of probabilities Shing's explanation that such payments were made at D's request (some for payment of workers' salaries and purchase of materials) against his promise to issue formal receipts in WC's name. This is reasonable as D had in 1997 issued formal receipts in WC's name with WC's company chop. Even in the temporary receipt insisted on by R for the Electrical Works, WC was specifically stated thereon. It is quite clear that both R and D regarded the Electrical Works were WC's works.

(i) In my view, D in agreeing to take up replacement work on 8th April 1999 for transporting machines did not transform himself from an independent contractor to an employee. Such task fell outside the Electrical Works and was what Shing described as a miscellaneous item that was difficult to price and for which R agreed to pay a replacement work daily fee. This is corroborated by Shing's evidence that in April 1999 D and his workers did replacement work (代工) for R. I find that 代工is not a term of art and does not necessarily equate to an employment relationship. I accept Shing's evidence that in this context it was a shorthand description of the agreed charge rate for miscellaneous works (which might include labour and materials cost) calculated on the basis of a daily rate and not descriptive of the nature of the work relationship, which label is in any event not conclusive. Further, R paid the replacement work fees to D and not to any of his workers. In my view, R looked towards D as its sub-contractor to deal with his own workers without involving R.

39. Whilst I place no regard on the nature of D's pre- and post-Electrical Works to ground my conclusion that D took on the Electrical Works as independent contractor, I find his conduct consistent with my finding. Wu said D took on electrical installation works for different contractors for renovation of office, factory and home premises. He further said that D's work was similar to his, which sometimes included sub-contracting electrical works at an agreed price. As regards post-Electrical Works, it appeared that after D and Wu worked in Yuen Long for about 10 days, D sub-contracted a job at Sai Kung and asked Wu to work for him, which Wu did for 1 day. D paid Wu his daily wages for these jobs. This is akin to the "sub-contract" work which Wu described in his evidence.

40. In considering the work relationship between R and D (if any) on 18th May 1999, I place no weight on (a) the statements of Solitech's boss, Mr Kum, in Solitech's letter to the Labour Department dated 9th August 1999 or at the death inquest to the effect that D was not its employee at the time of the Accident and (b) the suggestions in the Fatal Accident Report that D was appointed by Solitech to carry out the New Electrical Works and that D did so as electrical contractor on 18th May 1999. Such statements had not been tested under cross-examination in relation to the core issue in the present case. The death inquest was to ascertain the cause of death, not to determine R's liability, and the coroner did not have the benefit of countervailing evidence from Shing and Leung (who were not called as witnesses). Therefore I also do not place weight on the coroner's impression that D was a contractor.

41. Having considered the totality of the evidence and counsel's submissions, I have on the balance of probabilities come to the view that D was neither R's independent contractor nor employee when carrying out the New Electrical Works at the time of the Accident. Mr Lam submitted that it was not open to R to argue (in the absence of evidence from Solitech) that D carried out the New Electrical Works on 18th May 1999 pursuant to an agreement between Solitech and D made at an earlier time. In my view, it is sufficient to show (and I so find) that R had not engaged D in any capacity for the New Electrical Works. As it is common ground that D actually did carry out the New Electrical Works at the Premises on 18th May 1999, the irresistible inference is that D did so under some arrangement with Solitech.

42. I do not propose to set out all the reasons for the above findings but the main reasons were :

(a) Mr Lam relied on AP's evidence that on 17th May 1999 D telephoned and told her that he had just attended a Fotan factory with Master Leung to inspect a machine in anticipation of working there the following day and submitted that it set the scene for Wu and Hon's evidence in relation to the New Electrical Works. However, such hearsay evidence is not found in AP's witness statement and was not put to Leung in cross-examination. On the other hand, Leung stated quite clearly in his evidence that he was not involved in the arrangements between Solitech and D in respect of the New Electrical Works. Further, I find (see below) that it was Shing and not Leung who primarily liaised with Solitech and D in respect of the New Electrical Works. I therefore find that I cannot rely on AP's evidence in this respect.

(b) Some production machines were delivered prior to the completion of the Renovation Works, as confirmed by Hon. I find that D handled the power connection for these machines as independent contractor as part of the Electrical Works. The Electrical Works were the genesis of the New Electrical Works, which should have been part of the Electrical Works but for late delivery of the Machine. D acted as independent contractor in respect of the Electrical Works. Against this background, I find no justification for D to become instead R's employee for the New Electrical Works.

(c) I accept on the balance of probabilities that Solitech confirmed to Shing in mid-April 1999 that some of the production machines would arrive after the Renovation Works were completed and asked him to find an electrical worker to handle the New Electrical Works and future maintenance. Shing's immediate reaction that D was the most suitable person is sensible and logical for D designed the circuitry and carried out the Electrical Works.

I find Shing and Leung frank and forthcoming in their evidence on why they recommended D without involving R. I accept their evidence that it is not commercially viable for R to take up the New Electrical Works and then sub-contract the works to D. As compared with the Electrical Works which took about a month, the New Electrical Works were a small consequential by-product of the Electrical Works to be carried out after the Renovation Works were completed and the Premises handed over to Solitech, ie when R would have been out of the picture. Further, the New Electrical Works were strictly electrical works in contra-distinction to the Renovation Works which comprised non-electrical elements. Hence there is no apparent need for R's overall supervision. More importantly, R had no electrical licence, so even if it took on the New Electrical Works, it had to sub-contract such works entirely to D. Indeed, there is no evidence (and Shing/Leung in fact denied) that R had any technical expertise to oversee the New Electrical Works at all. R's involvement in the New Electrical Works is essentially redundant.

I also find that had R become involved, it would have to build in a fee for itself as R would hardly take on contractual liability without gain. But given its known lack of professional expertise in electrical matters, R could not have charged any substantial sum that fully reflected their involvement and profit cost for otherwise Solitech could have retained another electrical worker. This is consistent with Shing's evidence that at most R could only have been able to charge a small management fee, which would end up as a loss for R in light of the supervision and associated costs (eg traveling expenses) it had to incur for taking up the job. Leung also said that there was no profit to be made over a small job like the New Electrical Works. I accept on the balance of probabilities that there is no commercial incentive for R to become directly involved and that Shing had told Solitech of this right from the outset.

In my view, R's works at the Premises were at an end with the completion of the Renovation Works and this was how R and Shing/Leung regarded the situation.

(d) Both counsel agreed that the Lunch has pivotal importance. AP's case relied on the evidence of Wu and Hon that during Lunch, Leung invited D to act as代工or 篤工數 for the New Electrical Works and asked the court to draw the inference that D agreed to such works as R's employee based on their understanding of the meaning of 代工and 篤工數. Thus the veracity of their evidence in respect of the Lunch is of some importance. One matter of contention which stands out is whether Shing was present at the Lunch or not.

(e) I accept on the balance of probabilities that although both Shing and Leung supervised works at the Premises, Shing had a wider range of responsibilities than Leung as he dealt with contracts (ie with both Solitech and D) and scope of the works. Given that Shing had a supervisory and liaison role and, even on Hon's evidence, the factory's (ie Solitech's) supervisor and staff were present at the Premises, I accept on the balance of probabilities that Shing regularly attended the Premises.

From the tenor of the evidence, it was clear that Leung was the technical person (which presumably earned him the nickname "Master"). I also accept that he did actual work at the Premises, such as 彈線. Leung's evidence was that the Renovation Works included painting and plastering and Hon also accepted there were piping works. Quite clearly, R had to have staff present at the Premises to carry out and supervise these other Renovation Works. I find that Leung also regularly attended the Premises.

I also find on the balance of probabilities that Shing and Leung had lunch with D and his workers prior to the Lunch. Given that they had known D for some time and they all worked at the Premises, it is logical and probable that they would have lunch together. I reject Wu and Hon's contrary evidence.

(f) Although Mr Lam submitted that Wu and Hon had no incentive to lie against R, there is equally no reason for Shing/Leung to lie about Shing's presence at the Lunch. But given the very different roles of Shing and Leung described above, it is probable (and I so find) that Solitech contacted Shing about the New Electrical Works and primarily it was Shing and not Leung who spoke with D on the same. This is entirely consistent with Leung's evidence (which I accept) that had Shing not informed him of the New Electrical Works, he would not have known of the same. Having considered counsel's submissions and the totality of the evidence, I find on the balance of probabilities that Shing was present at the Lunch and in fact carried the conversation on the New Electrical Works with Leung adopting a subsidiary role. I reject Wu and Hon's evidence in this respect and on what was said at the Lunch. In the circumstances, AP has not discharged her burden of proof in relation to the core issue of this case.

(g) I find Shing and Leung forthright in their evidence (which I accept) in respect of the Lunch and, despite minor discrepancies, that there were a few subsequent follow-up discussions between Shing and D (in Leung's presence) on the New Electrical Works. I have carefully considered Mr Lam's detailed critique of their evidence, in particular his criticism that certain discussions subsequent to the Lunch had not been mentioned in their witness statements. However, I accept their explanations and do not consider Shing or Leung untruthful. I bear in mind the lapse of time and the fact that Leung did not have a primary role in this matter and even for Shing, he was merely acting as a conduit for Solitech's request and a go-between to urge D to clinch the deal.

But even if I am wrong and consideration is to be given to the suggestion that Leung told D he could charge for the New Electrical Works at HK$800.00/day as 代工 (according to Wu) or篤工數 (according to Hon), I note that Wu and Hon attached different meaning to代工and 篤工數. So even on AP's case, these 2 versions at most indicated Wu and Hon's different interpretations of what was said and cannot be safely relied on. I do not accept that代工 and 篤工數 are terms of art. This is shown by Shing's use of the description of 代工as a methodology of calculating payment and his understanding of what篤工數meant, which are quite different from Wu and Hon's understanding. I accept Shing's explanation of the meaning of代工in the context it was used.

(h) It was also suggested that Shing and Leung's evidence was suspicious in their failing to recognise Hon and in Leung being unable to remember that he had known Wu for a long time. I find nothing awkward or unacceptable in their evidence. They often acted as head contractor's representatives at the work sites and dealt with the sub-contractors and not their employees. It is not surprising that they do not have distinct memories of sub-contractors' workers, who may often change. Leung frankly admitted that although Wu might remember him, he did not remember Wu. Shing said that he might have remembered Wu and Hon at the material time but he could not do so now. I accept their evidence in this respect. I also accept that Hon was not introduced to Leung by nickname or otherwise.

(i) It was also argued that WC's quotation dated 4th March 1999 stating "試機日薪計算(800元)工" was indicative that the power connection works for testing machines were replacement work, thereby suggesting that D was R's employee. This quotation had been superseded and even if it is still effective, it at most described the method of how the fee for testing machine is to be calculated. Upon consideration of the totality evidence, I cannot regard it as descriptive of the nature of D's role in ultimately taking up the New Electrical Works.

(j) Mr Lam also submitted that Leung's evidence was unreliable because with his substantial experience, it was not possible that he was unable to assess quotations on electrical works and had to rely on obtaining 2 quotations for comparison as alleged. Leung frankly admitted that he knew that an electrical worker of D's experience could command HK$700.00-HK$800.00 per day. But other than using trusted electrical workers like D, I find it sensible that he should obtain 2 quotations to assess the value of electrical works. Such assessment does not only depend on the daily fee of an electrical worker but also on the design of the electrical circuitry and the electrical installations required, which require specialist expertise that Leung frankly admitted is beyond him. I find Leung's evidence unshaken over this aspect.

(k) Shing and Leung gave evidence, which I accept, that Solitech never paid R for the work done by D on 18th May 1999 and R correspondingly did not pay D for such work. I also accept that R did not make arrangements with Solitech and D for the New Electrical Works on the date of the Accident.

Conclusion

43. I therefore conclude that AP had failed to establish that R engaged D to carry out the New Electrical Works on the date of the Accident in any capacity at all. In the circumstances, AP's claim is dismissed.

44. There is no reason why costs should not follow event. I therefore make a costs order nisi that AP shall pay R costs of the proceedings (with all costs reserved) to be taxed if not agreed with certificate for counsel.